Bitcoin, Ethereum and the crypto markets at large are experiencing a sharp increase in volatility as Federal Reserve Chair Jerome Powell details the future of interest rate hikes in the US.
After raising interest rates another 0.75%, effectively making it more expensive for people to borrow capital, Powell gave a press conference centered largely on the pace of rate hikes moving forward.
Powell acknowledged that the US economy “has slowed significantly from last year’s record rapid pace” and suggested that the pace of rate hikes will slow in the months ahead.
“With the lags between policy and economic activity, there’s a lot of uncertainty. So we note that in determining the pace of future increases, we’ll take into account the cumulative tightening of monetary policy as well as the lags with which the monetary policy affects economic activity and inflation.
So I would say as we come closer to that level, move more into restrictive territory, the speed becomes less important… and that’s why I’ve said at the last two press conferences that at some point it will become appropriate to slow the pace of increases. So that time is coming, and it may come as soon as the next meeting or the one after that.”
Powell also repeatedly stressed the need to keep interest rates at an elevated pace to fight inflation, and his words triggered wild swings in the price of both crypto and traditional assets.
Bitcoin initially rose from around $20,350 to a high of $20,800. Those gains quickly reversed, with BTC now trading at $20,246 at time of publishing.
Ethereum spiked from $1,561 to a high of $1,612 before dropping to $1,540.
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Featured Image: Shutterstock/jiang jie feng/Sensvector